Tax Implications For Cruising The Pacific Northwest

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dhays said:
I would like to just point out, that while the confusing mix of RCWs and WACs in Washington State is a real pain for a few boaters, it is a very minor issue for the DOL and DOR.

It would be wonderful if the governor could create a task force to look at all the WACs and RCWs affecting boaters like ourselves and propose changes in the laws that would reconcile and simplify them. I don't think there would actually be opposition to the idea. However, time, money, and energy are always at a premium. I don't think that the problems of a few boaters trying to get out of paying a use tax are ever going to be important enough for the state to make the effort.

As others have pointed out, I do think that to a small extend, the confusion creates lost business opportunities for WA. Again, it isn't big enough issue to warrant attention.
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Especially when there are other pressing matters like suing the federal government. https://www.seattletimes.com/seattle-news/politics/washington-state-ag-bob-ferguson-says-states-to-sue-trump-over-daca/

The city of Seattle would benefit most from having more boaters utilize the local marinas and excellent service providers (plus restaurants etc), but they have far more important items on the agenda: https://www.seattletimes.com/seattle-news/health/safe-injection-sites-get-ok-from-king-county-health-board/
 
JustBob said:
The city of Seattle would benefit most from having more boaters utilize the local marinas and excellent service providers (plus restaurants etc), but they have far more important items on the agenda:
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The marinas seemed quite well utilized when we were there.

TF'ers tend to forget that we're not the norm, not the majority. Retired cruisers and trawler owners are very much the minority. The majority is weekend boaters who don't wander far from home and keep the boat at the nearest marina, live in the state in which they keep the boat, pay all the taxes and fees. They live in a location, keep the boat there, and live with the taxes without even thinking of alternatives. For them, keeping the boat elsewhere is not practical.
 
BandB said:
The marinas seemed quite well utilized when we were there.

TF'ers tend to forget that we're not the norm, not the majority. Retired cruisers and trawler owners are very much the minority. The majority is weekend boaters who don't wander far from home and keep the boat at the nearest marina, live in the state in which they keep the boat, pay all the taxes and fees. They live in a location, keep the boat there, and live with the taxes without even thinking of alternatives. For them, keeping the boat elsewhere is not practical.
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Precisely. Well said.

Personally I found my perfectly legal tax free niche as have many others. Very few who've done as I did post on TF that I can see. A low profile is a good idea.
 
sunchaser said:
Precisely. Well said.

Personally I found my perfectly legal tax free niche as have many others. Very few who've done as I did post on TF that I can see. A low profile is a good idea.
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Well, we live in about as boater friendly state as imaginable. Sales Tax is limited to $18k. No property taxes on boats. Registration varies from $7 to $250 depending on size and if registered and taxes paid in another state, then no worry about taxes here. Also, if registered in another state, you don't have to register in FL until here for 90 days.

There is one catch to that. If you are documented and come from a state that doesn't require registration for a documented vessel, then you are required to register in FL. FL is by no means the only state with that rule and while it may not be well enforced, it may be. I've known other states to be more diligent about it. Ultimately, a state that doesn't require a documented vessel to register may not be doing you much of a favor.
 
I winter in Oregon and use if for my residence. My income isn't taxable so I have no issue with their income tax. Before my current boat I had discussions with marine tax and legal people.
No sales tax is a big one in buying an expensive boat. 150 miles and I'm in Canada. Canada seems to be boat tourist friendly... Having a Nexus card for everyone aboard make customs easy.
 
chinacowboy said:
I'm looking at buying a boat and cruising the Pacific Northwest: Oregon, Washington, BC, or Alaska. I'm looking to find the most tax efficient way to do so. I am a resident of Texas. My original plan was to buy in Washington and cruise the san juan islands, with anacortes as a home base. I am now reconsidering those plans with the 8% sales/use tax implications. I'll be on the boat 5 months out of the year and will be storing on the hard the rest of the year I'll likely only be in Washington for 2-3 years max. A few questions:

1) What is the most tax efficient way to purchase a boat and cruise between San Juan Islands and BC? It is my understanding the boat could be non registered in Washington and visit for 180 days a year (60 day + extension) or for one full year and not come back for another two years.

2) Can you receive multiple 60 day+ extension permits from the Washington in consecutive years? Does the 60 days get reset when you cross into Canada?

3) It is my understanding if you are a non-resident in BC you would not pay any tax on your boat. Is that correct? Do they need any additional documentation to prove that? For overwintering it looks like you need to be in a yard in BC and receiving maintenance as well?

4)Do people base their boat in BC and then jump down to Washington for 60 days at a time? Is their an established pattern with other boaters to avoid the use tax?

5) Is the boating in Washington significantly better than cruising BC to substantiate the cost of the use tax?

6) I'm looking at doing a 4 year cruise starting in WA and slowly working up the inside channel to Alaska. It just seems crazy to pay an 8% use tax to a state that I will be based in for two years...am I looking at that right?

7) It looks like charter boats are exempt from the use tax. Do you have to run a profitable charter business to use this exemption? Anybody used this strategy with success?

To be clear I'm not looking to avoid paying tax I'm looking to minimize my tax burden with proper planning and structure. I'm looking forward to hearing any ideas how I can structure my planned cruise. Many Thanks!
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ChinaCowboy -

Coincidentally we are also from Texas and planning almost the exact same thing! Maybe the only difference is we plan to spend most of our time in Alaska, and store the boat on the hard there during the winters.

I have nothing to add to this thread other than to note our similar plans and thank you for bringing up the issue, since it seems there are many more suitable boats for sale in Washington than Alaska we will likely buy in Washington.
 
I came a cross a resource for PNW boat buyers. The PNW boat brokers association has on retainer a lawyer to help with transactional and tax questions. I believe this is a free resource for brokers to assist their clients with.

Fred Robinson
Robinson Law Firm
Seattle, WA
206-200-1551
fred at frobinsonlaw dot com
 
re:

7) It looks like charter boats are exempt from the use tax. Do you have to run a profitable charter business to use this exemption? Anybody used this strategy with success?

My understanding is that (of course) there is no exemption. But it is a "pay as you go" scenario. So you pay use tax for each charter, as well as your personal use. I don't know any details beyond that.

I have no idea what the enforcement would be like on a "casual" (shall we say) charter business. My guess is that it would be difficult to get an official position from the DOR and a better source would be anecdotal by those that are doing it, if you can find them and they are willing to talk about it.

Of course none of us should pay more than we owe. But for me, living my life in order to avoid a tax, that's just not for me. I just want to enjoy my boating.
 
Keep in mind that to charter a US flagged boat, I'm pretty sure it needs to be US built to comply with Jones Act. I have heard exceptions are possible, but know nothing about them.
 
Couple of dozen Grand Banks in charter here in Bellingham, almost certain they are not US built but are all documented.
 
Bob Cofer said:
Couple of dozen Grand Banks in charter here in Bellingham, almost certain they are not US built but are all documented.
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They aren't even required to be documented if registered properly in the state. The exception is those over 5 tons chartered on the Great Lakes must be documented.
 
twistedtree said:
Keep in mind that to charter a US flagged boat, I'm pretty sure it needs to be US built to comply with Jones Act. I have heard exceptions are possible, but know nothing about them.
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I think you mean the Passenger Vessel Security Act, which deals with transporting passengers from one US port to another. The Jones Act deals with cargo.
 
Chinacowboy,

Let me cut to the chase. I wanted to do the same thing as you. I had planned to spend a year in Washington on my way north to Alaska. I'd lived in Seattle two times in my life and went to the University of Washington.

But having discovered what Twisted Tree described at length and very well, it all came down to whether I was willing to be at the mercy of bureaucrats. For me it would be a $20k roll of the dice.
No thanks.

So i will spend more time in BC and SE AK and minimize my time in WA.

60 days is a long time in the Pac NW. You will have plenty to see and do further north.

Richard
 
Very helpful thread. I just went through the same process. Oregon resident, purchased boat in Washington. I have 45 days to move the boat out of state. The $800 1 year cruising permit does not work for me because for the next two years I would not be able to come back to WA and go into Westport, La Push, Neah Bay, Ilwaco etc when going up/down the coast. I have to have this option with the new slow boat when the weather turns nasty. I'll quickly move the boat to Sidney, BC and spend my outfitting $s in Canada. Does WA understand what they are doing to their businesses?
 
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gsholz said:
Does WA understand what they are doing to their businesses?
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Yes, they understand that they are taxing people. Don’t get me started on the lack of a balanced business vs revenue perspective in WA.
 
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